How are trust deeds or mortgage liens treated in Montana?

Montana primarily operates as atitle theory state where the property title remains in
trust until payment in full occurs for the underlying loan. Foreclosure is anon-judicial remedy under this theory.
The document that secures the title is usually called adeed of trust. Montana law also permitsmortgages to
serve as liens upon real property and forjudicial foreclosures to occur through the courts. Montana is unusual in
that whether or not a mortgage ortrust indenture is used is dependant on both the size of the property and the amount
of the loan. TheSmall Tract Financing Act of Montana permitstrust indentures on
parcels “not more than 40 acres” and mortgages are required to be used if a loan exceeds $500,000. Thus the
majority of single family loans fall under thetrust indenture statute which was specifically enacted to provide
a less cumbersome method of foreclosure than by judicial means.

You're only seconds away from searching foreclosures FREE for 7 days with America's largest and most trusted database.

It's fast and easy!

How are Montana mortgages foreclosed?

The primary method of foreclosure in Montana involves what is known asnon-judicial foreclosure. This type of foreclosure does not involve court action but requires notice commonly callednotice of sale.
When thetrust indenture is initially signed it will usually contain a provision called apower of sale clause which upon default allows atrustee to sell the property in order to satisfy the underlying defaulted loan.
Thetrustee acts as a representative of the lender to effectuate the sale which typically occurs in the form of
an auction. Montana has special rules on who can serve as a trustee which persons are limited to attorneys, banks, and title
agents. Because this is a non-judicial remedy there are very stringent notice requirements and the legal documents are required
to contain thepower of sale language in order to use this type of foreclosure method.

Power of Sale Notice Requirements:

Prior to initiating a foreclosure sale the lender must record anotice of sale with the county clerk in which the
property is located within 120 days of the sale and serve the same on the borrower by certified or registered mail,
and be posted on the subject property at least 20 days before the sale and personally served on borrower.

Anotice of sale as described above must contain certain information including a description of the default,
thelenders identification of the recorded book and page of thetrust indenture a breakdown of foreclosure
costs and fees and the date and place of sale. The loan may be fully paid off at any time prior to the sale.
The notice must also be published in an approved newspaper for legal notices at least one per week for three weeks
in the county in which the property is located.

Foreclosure sales must take place between 9AM and 4PM at the county courthouse in the county in which the property
is located or at the trustee�s usual place of business so long as this is located in the county in which the property
to be foreclosed is located. The property is sold to the highest bidder.

In Montana, thelenders can also go to court in what is known as ajudicial foreclosure proceeding where the court
must issue a final judgment of foreclosure. If the deed of trust does not contain thepower of sale language,
the lender must seek judicial foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is
filed in court along with what is known alis pendens. A lis pendens is a recorded document that provides public
notice that the property is being foreclosed upon.

What are the legal instruments that establish a Montana mortgage?

The documents are known as thetrust indenture, and in a commercial transaction, asecurity agreement.
Sometimes the mortgage document is combined with the security agreement. Alternatively, amortgage is
filed to evidence the underlying debt and terms of repayment, which is set forth in thenote.

How long does it take to foreclose a property in Montana?

Depending on the timing of the various required notices, it usually takes approximately 140-150 days to effectuate an
uncontestednon-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks
delays and postponements of sales, or files forbankruptcy. Much of the ongoing delays in a foreclosure sales relate
to the proper service of parties in interest, governmental agencies and junior lienholders. Difficulty is finding or
serving these parties delays the process.

Is there a right of redemption in Montana?

Are deficiency judgments permitted in Montana?

Generally No. Adeficiency judgment may be not obtained using thenon-judicial foreclosure process when a
property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage
or deed of trust secures.